By: Manoah Kikekon
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| Bola Tinubu |
In a surprising financial move, the Nigerian Federal Government is seeking a new $1.75 billion World Bank loan despite announcing a massive 40.5% surge in revenue for the first eight months of 2025. This decision has sparked a heated debate among economists, questioning the balance between necessary development funding and the nation's rapidly growing debt burden.
The impressive revenue performance, confirmed by Presidential Adviser Bayo Onanuga, saw total collections hit a record N20.59 trillion from January to August 2025. This marks a significant jump from the N14.6 trillion collected in the same period last year, driven overwhelmingly by a 75% contribution from non-oil revenues, aligning with the government's economic diversification goals.
Despite this revenue boom, Nigeria faces critical funding gaps, particularly in infrastructure and capital projects. This shortfall was starkly highlighted when local contractors protested at the Ministry of Finance, demanding payment for projects worth N4 trillion executed in 2024, underscoring the tension between government income and expenditure.
To bridge these gaps, the government is turning to external borrowing. The World Bank is poised to approve four major loans totaling $1.75 billion before the end of the year, aimed at financing pivotal projects in agriculture, health, digital infrastructure, and support for small businesses.
The loan package includes $500 million for the Nigeria Sustainable Agricultural Value-Chains for Growth project, designed to boost productivity and economic diversification. Another $500 million is earmarked for the Building Resilient Digital Infrastructure for Growth initiative, seeking to expand the nation's tech sector capabilities.
Furthermore, a $250 million loan for the Health Security Programme in Western and Central Africa, Nigeria – Phase II aims to fortify the country's defenses against health emergencies. An additional $500 million for the Fostering Inclusive Finance for MSMEs in Nigeria project is intended to improve access to capital for small and medium-sized enterprises, which are the backbone of the economy.
This new borrowing adds to a substantial existing debt relationship. Data reveals the World Bank approved a staggering $8.40 billion in loans to Nigeria over the past two years (June 2023 - August 2025), funding 15 projects across energy, education, and governance sectors.
Economists are divided on the strategy. Lagos-based economist Adewale Abimbola argues that concessionary loans for viable projects are not inherently bad, stating, “Borrowing isn’t bad; what matters is utilisation.” He emphasizes that the economic impact hinges on effective deployment into projects that generate sustainable growth and strengthen revenue.
In contrast, development economist Dr. Aliyu Ilias expressed strong reservations. He pointed out that the national debt has skyrocketed from N87 trillion to approximately N149 trillion, with debt servicing consuming a crippling portion of revenue. He warned this crowds out capital expenditure, fuels inflation, and worsens foreign exchange imbalances, questioning the need for more debt amid claimed revenue surpluses.
The latest Debt Management Office (DMO) data underscores the concern: Nigeria’s total debt to the World Bank rose to $18.23 billion as of March 2025, now constituting 39.7% of the country's entire external debt stock. As the World Bank's role in Nigeria's financing framework expands, the critical challenge remains ensuring these loans fuel tangible development without leading the nation into a perilous cycle of debt servicing and fiscal distress.